Blog

Free Online Means Test Calculator

By Jonathan on January 31, 2009

I am not going to promise you that you are going to be able to follow this, but the folks at Nolo have released a free on-line means test program. I find this calculator more complex than the means test calculator built in to BestCase – the petition preparation program that I use. The BestCase program draws data from other fields that you fill out anyway – like mortgages and car payments, whereas the Nolo program is a stand alone and requires manual data entry.

If you are computer savvy I would almost suggest that you download the BestCase trial version (full featured except that it prints “demo” on the output) instead of the Nolo version. I supect that the folks at Nolo assume that most prospective debtors will get frustrated and call one of the lawyers who buy advertising space at the Nolo site!

In any case, here are links to both the Nolo calculator and to the BestCase download:

Nolo means test calculator

BestCase petition preparation program with means test calculator

Refund Anticipation Loans – A Bad Idea

By Jonathan on January 27, 2009

My Bankruptcy Law Network colleague Brett Weiss wrote a timely article on the Debt Law Network blog about a type of loan that is almost always a bad idea. Pioneered by the national tax return filing service chains, tax refund anticipation loans are short term loans collateralized by your refund. In exchange for a set up fee, a high interest rate and a two week loan, you too can get your refund 1o to 14 days earlier than you would if you e-filed.

If you are willing to wait the two week s for the IRS to issue your refund, you will save hundreds of dollars and that’s what I advise you to do.

There are other potential problems with refund anticipation loans. If the IRS challenges your tax calculations and does not issue a refund right away, you will be stuck with a high interest short term loan with very unfavorable terms.

Tax preparation services pitch refund anticipation loans by offering to finance the cost of tax preparation services into the loan as well. Don’t fall for this pitch – tax return services for simple returns often cost only $100 to $300. Save up the money or work a weekend job but avoid high interest short term credit.

Georgia Consumer Should Avoid Car Title Loans

By Jonathan on January 25, 2009

Today’s Atlanta Journal Constitution ran a front page article exposing the slimy underside to Georgia’s Car Title Loan industry. It turns out that Georgia has minimal regulation on car title lenders – who basically serve as a lender of last resort for desperate borrowers.

Georgia consumers learn the hard way that title loan borrowers literally risk the entire value of their vehicles when they take these loans.

The AJC article tells the story of a building contractor named Scott Oden, who pledged his wife’s $13,000 Ford Expedition for a $2,000 loan. Scott was unable to make the payments on time and the title loan store repossessed the vehicle. When the vehicle was sold, however, the title lender kept all of the proceeds. In other words if the vehicle generated $10,000 at auction, the title lender kept the entire $10,000 as Georgia law does not require the lender to refund to the borrower the difference between the loan balance and the sales price.

Needless to say the title loan law in Georgia makes it very profitable for title lenders to find a way to repossess and sell vehicles. In Scott’s case, he contends that a representative from the title lender promised him that he would have a chance to catch up the loan, but he discovered that this verbal promise was not kept. [Read more…] about Georgia Consumer Should Avoid Car Title Loans

How to Keep Your Costs Down and Get Good Bankruptcy Advice Quickly

By Jonathan on January 19, 2009

Personal bankruptcy is made for “what if” scenarios. What if I file individually instead of jointly with my wife? What if I quit my job while I am in the middle of my Chapter 13? What if I need a replacement vehicle after I file?

I don’t always have the answers but I can usually think through one or two likely scenarios. I can be more effective helping you if you give me the information I need. Specifically that means the following:

take the time to complete my intake questionnaire in its entirety. Don’t leave out information that you believe is not relevant. My intake questionnaire is keyed to my bankruptcy program and I have been developing and updating it for over 15 years. Everything on my questionnaire is there for a reason – and I can serve you better if I have everything that is requested there
get me copies of your credit reports. AnnualCreditReport.com offers a free service to get current copies of your credit reports. Current credit reports help us avoid leaving out creditors from our analysis and they can also provide other helpful information such as prior addresses and other names in which you have been extended credit
get me copies of all payment advices for the past 7 months. The Bankruptcy law now requires all debtors to engage in a median income test as well as a means test analysis. The starting point of this analysis is evidence of income you and other members of your household have received. Payment advices should be provided for salaries, investment income, one-time checks, some disability payments, dividends, etc. If you are not sure, ask.

Sometimes I hear from clients who want to submit their information on a spreadsheet or Quicken file. Feel free to send those files along, but do not send them in lieu of my questionnaire and the other requested information.

How to Repair Your Chex Systems Report After a Bankruptcy Discharge

By Jonathan on January 13, 2009

About 25% of the bankruptcy clients I represent have bounced checks due to insufficient funds. While there can be a criminal law violation if you bounce a check, often merchants do not prosecute unless the amount is significant. Even if there are no criminal implications, a bad check is most certainly a debt that needs to be included in your bankruptcy filing.

Many merchants use check reporting services like Chex Systems. Another check reporting service I see frequently is called Telecheck. These companies are credit reporting agencies just like Equifax or Experian and merchants use these companies when deciding whether or not to accept a check from a customer.

My Bankruptcy Law Network colleague, San Diego bankruptcy lawyer Michael Doan has written a very helpful post that sets out the specific steps that you need to take when you include a Chex Systems or Telecheck debt in your bankruptcy. You can click on the link to read Michael’s timely post. Michael notes that the check reporting agencies sometimes do not update their databases to show a “zero balance, discharged in bankruptcy” on accounts that are included in bankruptcy.

A Chex Systems file that show outstanding debt will make it very difficult, if not impossible, to obtain a new bank or checking account after bankruptcy. If you take the necessary steps to clear your check reporting file, you greatly improve your chances.

Michael’s advice clearly applies once you have received a discharge in Chapter 7 or Chapter 13. This raises a question in my mind as to what a Chapter 13 debtor can or should do during a five year Chapter 13 plan. I wonder if a Chapter 13 debtor could argue that a check reporting agency’s refusal to delete a reference to an outstanding balance could be considered as a violation of the automatic stay. I will pose this question to my BLN colleagues and update this blog post.

How Big is my Household for Chapter 7 or Chapter 13 Means Test Purposes?

By Jonathan on January 10, 2009

I have written a lot on this blog about the median income test and the means test. Each of these pre-filing calculations turn on both your household income as well as your family size.

While it would seem that the number of people in your family ought to be easy to calculate, it turns out that issues do arise relating to this very important calculation.

I recently received an email from a blog reader named Sheila who asks the following law school exam type of question:

I have been told conflicting things about determining household size for purposes of the chapter 7 means test. My 20 year old son currently lives with me for free. He will probably move out in the next couple months. My 18 year old daughter lives with me, but will be going away to college in the fall. A divorce decree allows my ex-husband to use her as a dependent for tax purposes. My 16 year old daughter lives with me and is my dependent for tax purposes. How do I determine my household size for the purpose of the means test?

Here is my response: [Read more…] about How Big is my Household for Chapter 7 or Chapter 13 Means Test Purposes?